Corporation Tax Act 2009 section 1192

When costs are taken to be incurred

Section 1192 sets out the rules for determining when the costs of a film are treated as having been incurred for corporation tax purposes, to prevent companies from claiming tax relief prematurely.

• Film costs are only treated as incurred once the related work has actually reached the corresponding stage of completion
• Advance payments cannot be counted as incurred costs until the work they relate to has been completed
• Deferred payments are only recognised to the extent that the relevant work has been completed
• Unpaid costs are only included where there is an unconditional obligation to pay, and where payment depends on the film earning income, costs are only recognised once sufficient income has been or will be earned